Re Keystone Group Holdings Pty Ltd (Receivers & Managers Appointed) (Administrators Appointed)

[2017] NSWSC 454

Supreme Court

New South Wales

Medium Neutral Citation:

In the matters of Keystone Group Holdings Pty Ltd (Receiver & Managers Appointed) (Administrators Appointed) and Others [2017] NSWSC 454

Hearing dates:

10 April 2017

Decision date:

21 April 2017

Before:

Gleeson JA

Decision:

10 April 2017

 

(1) Pursuant to s 447A(1) of the Corporations Act 2001 (Cth), orders that Pt 5.3A of the Corporations Act 2001 is to operate in relation to Second, Seventh to Twelfth, Twentieth and Thirtieth Plaintiffs (the "Companies") as if reg 5.6.18(2) of the Corporations Regulations 2001 (Cth) omitted words after "must not be adjourned to a day..." and included instead of the omitted words (namely "that is more than 45 business days after the first date on which the meeting was held") the words "later than 5 May 2017" and as if that Part allowed adjournment of the meeting convened under s 439A, Corporations Act 2001 to a day not later than 5 May 2017 despite the operation of reg 5.6.18(2), Corporations Regulations 2001.

 

(2) Pursuant to s 447A(1), Corporations Act 2001, orders that Pt 5.3A of that Act is to operate in respect of the Company as if reg 5.6.18(1) Corporations Regulations 2001 included a subsection (c) which read "or if the Administrator of the Company so determines - must".

 

(3)   An order, that the First Plaintiffs give notice of these orders to all known creditors of the Second, Seventh to Twelfth, Twentieth and Thirtieth Plaintiffs and to the Australian Securities and Investments Commission by no later than 6pm on 10 April 2017.

 

(4)   Liberty to apply to any person affected by these orders, including any creditors of the Second, Seventh to Twelfth, Twentieth and Thirtieth Plaintiffs, to vary or set aside these orders on 48 hours' notice to the First Plaintiffs and to the Court.

 

(5) An order that, until further order, pursuant to s 8 of the Court Suppression and Non-Publication Orders Act 2010 (NSW), the Confidential Affidavit of Katherine Elizabeth Barnet sworn 9 April 2017; Confidential Exhibit KEB3 to the Affidavit of Ms Barnet, being Exhibit 2 on this application; and that part of exhibit 3 on the application, being par 9 onwards of (confidential) Affidavit of Henry Peter McKenna sworn 30 October 2016, be suppressed and non-publication or disclosure of it be limited to:

 

(a)   the plaintiffs and their legal representatives; and,
(b)   the Court.

 

(6)   An order the costs and expenses of this application be costs and expenses in the administration of the Second, Seventh to Twelfth, Twentieth and Thirtieth Plaintiffs.

 

(7)   These orders be entered forthwith.

 

21 April 2017

 (8)   Vary order 2 made on 10 April 2017, by deleting the word “Company” (after the words “is to operate in respect of”) and inserting the word “Companies”.

Catchwords:

CORPORATIONS – external administration – application to extend convening period for adjourned second meeting of creditors to a date later than the latest day allowed by s 439B(2), Corporations Act 2001 and Corporations Regulation 5.6.18(1) – latest day allowed by legislation would not allow enough time to complete business sale agreement for a number of the plaintiff companies – where failure to complete sale agreement would likely lead those plaintiff companies to proceed into liquidation – where liquidation of plaintiff companies would have significant detrimental effects on the companies, their creditors and employees – whether orders should be made under s 447A varying how Pt 5.3A and reg 5.6.18(1) is to operate in relation to the plaintiff companies.

Legislation Cited:

Corporations Act 2001 (Cth), ss 439A, 439B, 447A(1), 1605, Pt 5.3A
Court Suppression and Non-Publication Orders Act 2010 (NSW), s 8
Insolvency Law Reform Act 2016 (Cth), Sch 2, Pt 2, Item 110
Corporations Regulations 2001 (Cth), reg 5.6.18(1)(c), 439A(6), 439B(2)

Cases Cited:

In the matter of Beechworth Land Estates Pty Ltd (admins apptd) and Griffith Estates Pty Ltd (admins apptd) [2014] NSWSC 1918
In the matter of Canberra Eye Hospital Pty Ltd (Administrator Appointed) [2015] NSWSC 1215
In the matter of Keystone Group (Receivers and Managers Appointed) (Administrators Appointed) [2016] NSWSC 1011
In the matter of Palace Memories Pty Ltd (Administrator Appointed) [2015] NSWSC 56
Re ABC Learning Centres (admins apptd)(recs and mgrs aptd); Application by Walker and Another (No 8) (2009) 73 ACSR 478
Re Diamond Press Australia Pty Ltd [2001] NSWSC 313
Re PriceRight Construction Pty Ltd (Admin Apptd) (2006) 57 ACSR 206; [2006] NSWSC 324

Category:

Principal judgment

Parties:

Henry Peter McKenna, Katherine Elizabeth Barnet and Hugh Armenis in their capacity as joint and several administrators of the second to forty-third plaintiffs (First Plaintiffs)
Keystone Group Holdings Pty Ltd (Receiver and Managers Appointed) (Administrators Appointed) (Second Plaintiff)
Italian Brands Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) (Seventh Plaintiff)
Italian 1 Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) (Eighth Plaintiff)
Italian 2 Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) (Ninth Plaintiff)
Italian 3 Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) (Tenth Plaintiff)
Italian 4 Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) (Eleventh Plaintiff)
Italian 5 Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) (Twelfth Plaintiff)
Trattoria 1 Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) (Twentieth Plaintiff)
Keystone Australia Holdings Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) (Thirtieth Plaintiff)

Representation:

Counsel:
Mr D Pritchard, SC (First, Second, Seventh to Twelfth, Twentieth and Thirtieth Plaintiffs)

  Solicitors:
K&L Gates (First, Second, Seventh to Twelfth, Twentieth and Thirtieth Plaintiffs)

File Number(s):

2016/197624

Judgment

1. GLEESON JA: The first plaintiffs are the administrators under Pt 5.3A of the Corporations Act 2001 (Cth) of the second to forty third plaintiffs, being 42 companies that make up the Keystone Group. The companies operate or have in the past operated a number of restaurants and bars in respect of which liquor licences are held. The administrators were appointed on 28 June 2016 very soon after a group of secured creditors had appointed receivers and managers of the assets and undertakings of the 42 companies.

2. On 18 July 2016, Barrett AJA made orders which included (1) an order pursuant to s 439A of the Corporations Act that the period within which the administrators must convene the second meeting of creditors of each of the second to forty third plaintiffs be extended up, to and including, 31 January 2017 - which was effectively an extension of six months; and (2) an order pursuant to s 447A(1) of the Corporations Act that such meetings may be held at any time during the convening period, or within 5 business days of such date, as extended by order 1, notwithstanding the provisions of s 439A: In the matter of Keystone Group (Receivers and Managers Appointed) (Administrators Appointed) [2016] NSWSC 1011.

3. That application by the administrators under s 439A was made with the consent of the receivers. There was evidence before the Court on that occasion concerning the state of the receivership, the complexity of the affairs of the Keystone Group, the receivers’ estimate of the period that would be sufficient to enable them to negotiate the sale of the businesses as going concerns if prospective buyers were forthcoming, the number and value of unsecured creditors, the position of secured creditors, lessors of premises and the number of employees. Barrett AJA expressed his conclusion at [17] as follows:

In the whole of the context disclosed by the evidence before me, I am persuaded that it is preferable, having regard to the objectives of Pt 5.3A, that the additional time sought should be granted, particularly since that additional time will be devoted to, and has been calculated by reference to, what appears to be a responsibly conceived timetable for testing the market in the hope that returns may be maximised through an orderly sale without undue haste and with adequate opportunity to consider proposals received and, as necessary, to take advantage of any competition that may emerge in the market for corporate control in the particular area.

4. The second meeting of creditors for each of the 42 companies was held on 7 February 2017. Each meeting was adjourned for a maximum period of 45 business days pursuant to s 439B. Section 439B(2) provides that a meeting convened under s 439A may be adjourned from time to time, but the period of the adjournment, or the total of the periods of adjournment, must not exceed 45 business days. Similarly, reg 5.6.16 of the Corporations Regulations 2001 (Cth) provides that a meeting convened under section 439A of the Act must not be adjourned to a day that is more than 45 business days after the first day on which the meeting was held.

5. Section 439B was repealed by the Insolvency Law Reform Act 2016 (Cth), Sch 2, Pt 2, item 110, with effect from 1 March 2017: see s 1, table items 2 and 5. However, that repeal was deferred by the Corporations and Other Legislation Amendment Act (Insolvency Law Reform) Regulation 2016 (Cth) (the 2016 Regulation) which introduced Pt 10.25 into the Corporations Regulations 2001 (Cth). Corporations Regulations, reg 10.25.02(3)(g) provides that the amendments made by certain items of Pt 2 of Sch 2 to the Insolvency law Reform Act 2016, including relevantly item 110 (which repealed s 439B), apply in relation to external administrations on and after 1 September 2017. Thus, contrary to the administrators’ submissions, s 439B(2) continues to apply to the administration of the plaintiff companies at this point in time.

6. Corporations Regulations, reg 5.6.16 is not affected by Insolvency Law Reform Act 2016.

Extension sought

7. By interlocutory process filed on 10 April 2017 the administrators, with the consent of the receivers, sought orders under s 447A of the Corporations Act which would have the effect of allowing a further adjournment of the second meetings in respect of 9 companies in the Keystone Group to a day not later than 26 May 2017. During the hearing, the administrators indicated that an adjournment of the second meetings to 5 May 2017 would be sufficient. The 9 companies are the second, seventh to twelfth, twentieth and thirtieth plaintiffs.

8. The eighth, ninth, tenth, eleventh, twelfth and twentieth plaintiffs (the Jamie’s Companies) operate restaurants known as “Jamie’s Italian” at leased premises in Sydney, Perth, Canberra, Brisbane, Adelaide and Parramatta. As their names imply, those restaurants are associated with a ‘celebrity’ chef, Mr Jamie Oliver. The second plaintiff, Keystone Group Holdings Pty Ltd, is the employer entity in the Keystone Group and employs the employees of the Jamie’s Companies. The seventh plaintiff, Italian Brands Pty Ltd, is the developer in Australia of “Jamie’s Italian” restaurants and under an agreement with Jamie’s Italian International Limited, an English company, is the franchisor of those restaurants (the Development Agreement). The thirtieth plaintiff, Keystone Australia Holdings Pty Ltd, is a guarantor of the seventh plaintiff’s obligations under the Development Agreement. The thirtieth plaintiff is the ultimate parent company in the Keystone Group.

9. The extension sought to 5 May 2017 is a date later than the latest day allowed by s 439B(2) and Corporations Regulations, reg 5.6.16 which provides:

Adjournment of meeting

(1) The chairperson of a meeting:

(a)  if so directed by the meeting--must; or

(b)  with the consent of the meeting--may;

adjourn the meeting from time to time and from place to place.

(2) A meeting convened under section 439A of the Act must not be adjourned to a day that is more than 45 business days after the first day on which the meeting was held.

(3) An adjourned meeting must be held at the place of the original meeting unless:

(a)  the resolution for adjournment specifies another place; or

(b)  the Court otherwise orders; or

(c)  the liquidator or provisional liquidator, or the administrator of a company under administration or of a deed of company arrangement, otherwise orders; or

(d)  the place of the original meeting is unavailable, in which case the chairperson may appoint another place.

10. Counsel for the administrators submitted that while Corporations Regulations, reg 5.6.16 continues to apply to the plaintiff companies, s 439B no longer applies having regard to the transitional provisions in Dvn 3 of Pt 10.25 of the Corporations Act inserted by Sch 2, Pt 2, item 322 of the Insolvency Law Reform Act 2016, in particular s 1605.

11. Section 1605 of the Corporations Act relevantly provides:

1605  Old Act continues to apply for certain meetings convened etc. before commencement day

(1)  If:

(a)  the administrator of a company under external administration is required to convene a meeting of the company’s creditors under section 439A of the old Act; and

(b)  the convening period for the meeting as fixed by subsection 439A(5) of the old Act (or extended under subsection (6) of that section) ends on or after the commencement day; and

(c)  as at the commencement day, the meeting has not been convened;

then the old Act continues to apply on and after the commencement day (despite the repeal of subsections 439A(3) and (4) and section 439B by Schedule 2 to the Insolvency Law Reform Act 2016) in relation to the meeting.

…….

12. The reference to the “old Act” is a reference to the Corporations Act in force prior to the introduction of the Insolvency Law Reform Act2016. The reference to the “commencement date” in s 1605 is not 1 March 2017, but 1 September 2017 by reason of Corporations Regulations, reg 10.25.01(3), introduced by Sch 2 of the 2016 Regulation. Section 1605 deals with the circumstance where the convening period for a second meeting ends after 1 September 2017, but the meeting has not been convened as at 1 September 2017. That is not the present case. Here the convening period for the second meetings, as fixed by s 439A(5) and extended by court order made on 18 July 2016, ended on 7 February 2017, being a date before the “commencement date” of the Insolvency Law Reform Act 2016 being 1 September 2017.

13. Nonetheless it can be accepted, as the administrators submitted, that the matter of adjournment of the second meetings convened in accordance with s 439A, is governed by Corporations Regulations, reg 5.6.18 the terms of which is set out at [9] above.

14. In Re PriceRight Construction Pty Ltd (Admin Apptd) (2006) 57 ACSR 206; [2006] NSWSC 324 Barrett J explained that an order under s 477A can not only vary the operation of s 439B(2) (a provision, at that time, within Pt 5.3A) but also state that Pt 5.3A is to operate on the basis that reg 5.6.18(2) does not apply. His Honour said at [7]-[9]:

[7] The order the plaintiffs seek is one empowering them to adjourn to a date not later than 31 May 2006. But it is clear from reg 5.6.18 that adjournment is a matter for the meeting itself and is implemented by the chairperson who must adjourn the meeting “from time to time and from place to place” if so directed by the meeting and may do so with the consent of the meeting. The chairperson cannot, consistently with reg 5.6.18, act unilaterally, that is to say, without either a direction or the consent of the meeting (see Re Vouris; Epromotions Australia Pty Ltd and Relectronic-Remech Pty Ltd (in liq) (2003) 177 FLR 289 ; 47 ACSR 155 ; [2003] NSWSC 702), although it may well be that emergency powers of unilateral adjournment of the kind considered in cases such as Byng v London Life Assn Ltd [1990] Ch 170 are available: see Re Vouris, above; Selim v McGrath (2003) 177 FLR 85 ; 47 ACSR 537; [2003] NSWSC 927.

[8] Regulation 5.6.18(2) is in terms which reinforce s 439B(2). This raises a point that requires brief discussion. Under s 447A, the court may make any order it thinks appropriate about how “this part” — that is, Pt 5.3A of the Act — is to operate in relation to a particular company. As is testified by the decision of the High Court in Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 ; 172 ALR 28; 34 ACSR 250; [2000] HCA 30 , the jurisdiction under s 447A is very broad. It is now well recognised, for example, that the power may be used to extend the convening period in a way that s 439A itself does not allow. In addition, it was held by Lindgren J in Re Double v Marketing Pty Ltd (1995) 16 ACSR 498 that s 447A may be employed in a case such as the present to extend the s 439B(2) deadline: see also Re Open Telecommunications Ltd; ex parte Whitton [2002] NSWSC 930.

[9] There is not, I think, in Lindgren J’s judgment any reference to the separately imposed version of the s 439B(2) deadline arising from reg 5.6.18(2). But it is my opinion that an order under s 447A can not only vary the operation of s 439B(2) (a provision within Pt 5.3A) but also state that Pt 5.3A is to operate on the basis that reg 5.6.18(2) does not apply. Even with that added element, the order is still one about how Pt 5.3A is to operate in relation to the particular company.

15. Other cases in which s 477A has been used to alter the operation of s 439B(2) and reg 5.6.18(2) of the Corporations Regulations, so that the date on which a second meeting of creditors could be held would be extended from the date on which they would be required to be held under s 439A to a later date include: In the matter of Beechworth Land Estates Pty Ltd (admins apptd) and Griffith Estates Pty Ltd (admins apptd) [2014] NSWSC 1918; In the matter of Palace Memories Pty Ltd (Administrator Appointed) [2015] NSWSC 56; and In the matter of Canberra Eye Hospital Pty Ltd (Administrator Appointed) [2015] NSWSC 1215.

16. One of the administrators, Ms Katherine Barnet, gave an affidavit dated 9 April 2017 explaining the current position of the administration of the companies in the Keystone Group. Relevantly, a business sale agreement was entered into by the receivers and the administrators on 31 December 2016 for the sale of the businesses owned by the eighth, ninth, tenth, eleventh, twelfth and twentieth plaintiffs to an Australian incorporated company which is a wholly owned subsidiary of Jamie’s Italian Limited, an English company, of which Mr Oliver is a director. The terms of that agreement are the subject of a confidentiality order, which I will make. The agreement has not yet completed. An adjournment of the second meetings for the 9 plaintiff companies was sought by the administrators to enable time for completion of the sale agreement.

17. Ms Barnet indicated that the material terms of the sale agreement include first, that the real property leases of the six venues are to be assigned to the buyer or surrendered on terms satisfactory to the relevant Jamie’s Companies; second, a requirement that existing bank guarantees held by any landlords of the six venues are to be returned to the relevant Jamie’s Companies; and third, a requirement that all employees (other than the managing director) in relation to the businesses operated by the Jamie’s Companies are to be made offers of employment by the buyer for a position and on terms and conditions of employment that are, overall, the same as or substantially similar to the employee’s existing position with the second plaintiff. Ms Barnet expressed the opinion that these terms have the effect of reducing the actual, or potential contingent, claims against each of the Jamie’s Companies.

18. The ‘cut-off’ date by which either party may terminate the sale agreement if the necessary conditions precedent for completion has not occurred, has been extended by agreement in writing to 28 April 2017. The sale agreement also requires that various security interests registered on the Personal Property Securities Register in respect of finance lease facilities provided by the Commonwealth Bank of Australia (CBA) to certain Jamie’s Companies are to be released on completion. Ms Barnet said that the receivers have informed her that the negotiations in regards to obtaining those releases from the CBA are advanced but not finalised.

15. Ms Barnet explained that there were two main reasons for the delay in completion of the sale agreement. First, that negotiations with the respective landlords of each venue, while advanced, had not been finalised. Second, that the buyer’s application to transfer the liquor licence in respect of the Western Australian premises had not been approved by the relevant authority. That approval has now been given by the Western Australian Department of Racing, Gaming and Liquor in a letter dated 7 April 2017.

16. Ms Barnet outlined in her affidavit the state of negotiations with the respective landlords for the six venues. It is sufficient to note that the receivers and administrators have encountered a number of issues in finalising the terms upon which the assignment of leases to the buyer is to take place. Those issues include the payment of any outstanding arrears under the leases; negotiating the cost and scope of any rectification works; ensuring the return of existing bank guarantees; obtaining appropriate releases in favour of the Jamie’s Companies, existing guarantors and the administrators and receivers; putting in place the necessary arrangements to allow for a co-ordinated completion in respect of all of the venues simultaneously as required under the sale agreement; negotiating liability and quantum of any costs payable to the landlords pursuant to the lease assignments; and arranging the availability of the required signatories for the purchaser and respective landlords to execute the various assignment agreements.

17. Ms Barnet expressed the opinion that while each of the lease assignments would be finalised prior to 11 April 2017, it would not be possible to complete the sale agreement with respect to the six venues prior to that date. Ms Barnet gave evidence that she had been informed by the receivers that they had paid up-to-date all rents and amounts payable under the leases for the six venues and the receivers remained ready, willing and able to continue to pay all rental arrears which fall due under the leases of those venues.

18. Based on proofs of debt submitted at the first creditors meeting and subsequently, at least 257 proofs of debt have been received by the administrators for a total value in the order of approximately $118,000,000. In Ms Barnet’s opinion, the Jamie’s Companies are each insolvent.

19. Ms Barnet gave two reasons for the late timing of the extension application. One was that the administrators and the receivers had not apprehended that the transfer of the liquor licence with respect to the Perth premises would take over two months. The other was that the administrators and receivers had hoped and believed that all matters required to complete the sale agreement would have completed prior to 7 April 2011, in advance of the time for the last date for the adjourned second meetings on 11 April 2017.

20. Ms Barnet expressed the opinion that a further adjournment of the second meetings in relation to the Jamie’s Companies was in the best interests of the creditors and members of the Keystone Group as a whole for a number of reasons including:

• since no deed of company arrangement had been proposed in respect of the Jamie’s Companies, it could be expected that those companies would proceed into liquidation on 11 April 2017, together with the other Keystone Group companies, if the second meetings for the Jamie’s Companies proceeded on 11 April 2017.

• the receivers had obtained the support of the senior secured creditors of the Keystone Group for the extension of the second meetings.

• the preservation of the moratorium against the respective landlords of the six venues’ terminating leases would be jeopardised if the Jamie’s Companies were placed into liquidation and in such case it was possible that the landlords and other stakeholders, including the CBA, may withdraw their co-operation in relation to the sale process of the venues.

• the potential prejudice to 301 employees proposed to be transferred to the purchaser at completion of the sale, because their employment was at risk if the Jamie’s Companies proceeded into liquidation.

• the landlords of the six venues were now co-operating with the sale process and upon completion would obtain solvent tenants capable of maintaining their obligations under the leases and therefore those landlords would be in a more favourable position if the sale agreement completed.

• the potential return to creditors of the Jamie’s Companies is likely to be maximised and the harm to them is likely to be minimised by maintaining the status quo in circumstances where the Jamie’s Companies remain in administration, as opposed to liquidation, as at the date of completion of the sale agreement.

25. Ms Barnet also expressed the concern that if the second meeting of creditors were to proceed on 11 April 2017 in respect of the Jamie’s Companies and those companies were all placed into liquidation, that event would cause a further breach under the lease agreements of the venues pursuant to the termination clauses in those leases, except for the premises in Perth.

26. In Re Diamond Press Australia Pty Ltd [2001] NSWSC 313 at [10], Barrett J explained the approach to an application under s 439A(6) to extend the convening period for the second meeting as follows:

The function of the Court on an application such as this is, as I see it, to strike an appropriate balance between, on the one hand, the expectation that administration will be a relatively speedy and summary matter and, on the other, the requirement that undue speed should not be allowed to prejudice sensible and constructive actions directed towards maximising the return for creditors and any return for shareholders.

27. In Re ABC Learning Centres (admins apptd)(recs and mgrs aptd); Application by Walker and Another (No 8) (2009) 73 ACSR 478 Emmett J observed at [28] that Part 5.3A indicates acceptance by Parliament that it is not only the well-being of creditors that is at stake but the possibility of continuing the business of the company for the benefit of employees and customers.

28. I am satisfied that a proper case has been made out with respect to the 9 plaintiff companies for an extension of time for convening the adjourned second meeting to a date no later than 5 May 2017. Here the administrators (and the receivers) need time to complete the sale agreement in relation to the businesses conducted by six Jamie’s Companies. The complexity of the terms of that transaction and the need to obtain certain consents from third parties has caused some unexpected delay in satisfying the conditions precedent to completion. Those difficulties now seem to have been satisfactorily addressed, but not in time to permit completion to occur before 11 April 2017. An extension of the convening period for the adjourned second meeting is required to avoid the likelihood of those companies being placed into liquidation if those meetings proceed on 11 April 2017. That outcome would likely be highly detrimental to those companies and their creditors and employees, because there would be a significant risk that it would imperil the completion of the sale agreement, for the reasons given by Ms Barnett.

29. The extension of the convening period for the adjourned second meetings will prolong the moratorium under s 440B only for a short period of time (just under 4 weeks), during which period the administrators are confident that completion of the sale agreement will occur, thus maximising the likely return to creditors of those companies. It is of significance that the receivers and the senior secured creditors support the extension sought, and the extension is also in the interests of the 301 employees of the second plaintiff who are intended to be transferred to the buyer. Although the landlords will remain bound by the moratorium on the exercise of their rights under s 440B, there is evidence that the receivers are up to date in all rental payments and are ready and willing and able to continue to pay the rent under the relevant leases.

30. The extension of the convening period for the adjourned second meetings will be achieved by use of the power conferred on the Court by s 447A to state that Pt 5.3A is to operate on the basis that Corporations Regulations, reg 5.6.18(2) is varied to permit the second meeting to be adjourned to a date no later than 5 May 2017. In addition, an order will be made that Pt 5.3A is to operate on the basis that reg 5.6.18(1) is amended to delete the specification of a maximum adjournment of 45 business days after the date on which the second meeting was first held and adding a new sub-par (c) which reads “or if the Administrator of the Company so determines – must.” This will permit the chairperson of the adjourned second meetings on 11 April 2017 to further adjourn the second meetings to a date no later than 5 May 2017.

31. Counsel for the administrators informed the Court that notice of this application was only given to creditors of the 9 plaintiff companies on (Friday) 7 April 2017. Since that notice is insufficient, the administrators propose orders which make provision for the giving of notice of the extension orders to all known creditors of those companies and to the Australian Securities and Investments Commission, and granting liberty to apply to any person affected by these orders, including creditors of the 9 plaintiff companies, to vary or set aside the orders on notice to the relevant plaintiffs’ and the Court. Those orders are appropriate.

Orders

32. For the above reasons, at the conclusion of the hearing on 10 April 2017, I made the following orders and directions:

1. Pursuant to s 447A(1) of the Corporations Act 2001 (Cth), orders that Pt 5.3A of the Corporations Act 2001 is to operate in relation to Second, Seventh to Twelfth, Twentieth and Thirtieth Plaintiffs (the "Companies") as if reg 5.6.18(2) of the Corporations Regulations 2001 (Cth) omitted words after "must not be adjourned to a day..." and included instead of the omitted words (namely "that is more than 45 business days after the first date on which the meeting was held") the words "later than 5 May 2017" and as if that Part allowed adjournment of the meeting convened under s 439A, Corporations Act 2001 to a day not later than 5 May 2017 despite the operation of reg 5.6.18(2) Corporations Regulations 2001.

2. Pursuant to s 447A(1) Corporations Act 2001, orders that Pt 5.3A of that Act is to operate in respect of the Company as if reg 5.6.18(1) Corporations Regulations 2001 included a subsection (c) which read "or if the Administrator of the Company so determines - must".

3. An order, that the First Plaintiffs give notice of these orders to all known creditors of the Second, Seventh to Twelfth, Twentieth and Thirtieth Plaintiffs and to the Australian Securities and Investments Commission by no later than 6pm on 10 April 2017.

4. Liberty to apply to any person affected by these orders, including any creditors of the Second, Seventh to Twelfth, Twentieth and Thirtieth Plaintiffs, to vary or set aside these orders on 48 hours' notice to the First Plaintiffs and to the Court.

5. An order that, until further order, pursuant to s 8 of the Court Suppression and Non-Publication Orders Act 2010 (NSW), the Confidential Affidavit of Katherine Elizabeth Barnet sworn 9 April 2017; Confidential Exhibit KEB3 to the Affidavit of Ms Barnet, being Exhibit 2 on this application; and that part of exhibit 3 on the application, being par 9 onwards of (confidential) Affidavit of Henry Peter McKenna sworn 30 October 2016, be suppressed and non-publication or disclosure of it be limited to:

1. the plaintiffs and their legal representatives; and,

2. the Court.

6. An order the costs and expenses of this application be costs and expenses in the administration of the Second, Seventh to Twelfth, Twentieth and Thirtieth Plaintiffs.

7. These orders be entered forthwith.

33. On 20 April 2017, I raised with the legal representatives for the administrators whether an order should be made under the slip rule, Uniform Civil Procedure Rules 2005 (NSW), r 36.17, to vary order 2 so that the reference to the “Company” read the “Companies”. The administrators confirmed that such a variation to order 2 was sought. Accordingly, I make the following additional order under the slip rule:

(8)   Vary order 2 made on 10 April 2017, by deleting the word “Company” (after the words “is to operate in respect of”) and inserting the word “Companies”.

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